introduction to business and business objectives and strategies Flashcards
(70 cards)
1
Q
enterprise definition
A
the actions of a risk taker starting their own business
2
Q
entrepreneur definition
A
a person who sets up a business or businesses, taking on financial risks in the hope of profit
3
Q
what are the factors of production
A
- land
- labour
- enterprise
- capital
4
Q
factors of production definition
A
the inputs needed for creating a good or service which results in making profits
5
Q
what are primary organisations
A
raw materials / natural resources
6
Q
what are secondary organisations
A
manufacturing the raw materials into a final product
7
Q
what are tertiary organisations
A
providing services and selling the final product
8
Q
what are private sector organistations
A
-owned by individuals and are driven by profit
- financed by private money from stakeholders and by bank loans
- eg dental firms
9
Q
what are public sector organisations
A
- owned by the government
- provide goods and services for the benefit of the community
- operate with money raised from taxes
- eg police and NHS
10
Q
what are third sector organistations
A
- voluntary and community groups
- seek to help and not make a profit
- eg charities
11
Q
what are local markets
A
when a business only tries to sell locally
12
Q
what are national markets
A
when a business tries to sell in one country
13
Q
what are international/ global markets
A
when a business sells all over the world
14
Q
what is the difference between national and multinational businesses
A
national businesses sell to one country and multinational businesses sell all over the world and have factory’s in 2 or more countries
15
Q
what is a sole trader
A
a business which is owned and ran by only one person
- can employ people
- responsible for all debts due to unlimited liability
16
Q
advantages of a sole trader
A
- self satisfaction
- owner keeps all profits
- easy decision making
- quick and easy to start up
- no info about profits must be published
17
Q
disadvatages of a sole trader
A
- hardwork
-stressful
-unlimited liability - not much spare time
- the business stops when owner dies
- business cannot sell shares
18
Q
partnership definition
A
- when a business is started and owned by more than one person
19
Q
advantages of parterships
A
- different skills
- no info of profits has to be published
- share the workload
20
Q
disadvantages of partnerships
A
- profit is shared
- unlimited liability
- slower decision making as parteners might not agree
- cannot sell shares
21
Q
public limited company definition ( plc)
A
able to offer its shares to the public on the stock exchange
22
Q
advantages of a plc
A
- can raise huge finance through shares
- owners have limited liability
- business has continuity
23
Q
disadvantages of a plc
A
- long time to set up
- anybody who buys 51% of the business can take over the business
-public can see info about the business
-
24
Q
what is limited liability
A
the owners of a business can only lose the money they have invested if it fails
25
what is unlimited liability
the owner of a business is responsible for repaying all the debts of the business
26
what is a private limited company ( ltd)
a smaller business which can only sell shares to people invited in
27
advantages of a ltd
- owners benefit form limited liability
-shareholders can restrict who buys shares ( easier to control )
-business has continuity
28
disadvantages of an ltd
- takes a long time to set up
- public can see all info
-
29
what is a franchise
when a person or a group of people set up a business using a well known brand
30
what is the difference between a franchisor and a franchisee
- franchisee is a small business owner that handles the day-to-day management of a specific location.
- The franchisor oversees the big picture for an overall brand and all its franchisees
31
benefits to the franchisor
- A classic growth strategy
- Enables much quicker geographical growth for a relatively low investment
- Still have the option to open locations that are operated by the Franchisor
- Capital investment by franchisees is an important source of growth finance
32
benefits to the franchisee
- The franchisee is given support by the franchisor. This includes marketing and staff training. So starting a business in this way requires less expertise
- The franchisee may benefit from national advertising and being part of a well-known organisation with an established name, format and product
-Less investment is required at the start-up stage since the franchise business idea has already been developed
- A franchise allows people to start and run their own business with less risk. ( chance of failure is lower )
33
drawbacks of a franchisee
- Cost to buy franchise – can be very expensive (hundreds of thousands of pounds).
- Have to pay a percentage of your revenue to the business you have bought the franchiser from.
- Have to follow the franchise model, so less flexible. You would probably be told what prices to set, what advertising to use and what type of staff to employ.
34
what is a co-operative
a business or organisation that’s owned and controlled by its members, to meet their shared needs
- run on principles of shared ownership, shared voice & shared profits.
35
how do you measure the size of a business
-number of employees
-market share
- profits
-sales turnover
36
what is a small / medium enterprise
any business with fewer than 250 employees
37
advantages of small /medium enterprise
- managed and controlled easily
- easily can adapt to meet cutomers needs
- cheap rent
38
disadvantages of small / medium enterprise
- limited access to source of finance
- owner has large responsibility
- fewer opportunity for economies of scale
39
what is a large enterprise
- usually international and have the most market dominance and sales in the market
40
advantages of large enterprise
- can afford to employ specialists and professional managers
- able to set lower prices ( economies of scale )
-different sources of finance
41
disadvantages of large enterprise
- difficult to control and communicate
- slow decision making
- lots of staff needed
expensive rent
42
explain what a joint venture is
a business arrangement in which two or more parties agree to put together their resources or capital for the purpose of accomplishing a specific task.
- This task can be a new project or any other business activity.
43
advantages of a joint venture
- JV partners benefit from each others expertise and resources
- reduces the risk ( especially if entering a new market )
44
disadvantages of a joint venture
- partners may disagree on objectives - causing conflict
-imbalanced levels of expertise
45
what is a strategic alliance
an agreement between 2 or more businesses which work together to achieve a common goal - it is not a legally enforceable contract
46
advantages of a strategic alliance
47
what is a stakeholder
anyone who has an intrest in a business
48
what are internal stakeholders
people who have an intrest from within the business
eg- employees, owners
49
what are external stakeholders
people who have an intrest from outside the business
- eg government, local community
50
objectives of the stakeholders of the business - managers
- want a good salary and opportunities for further career progression
51
objectives of the stakeholders of the business - customers
- want good quality products
-range of products
- good customer service
52
objective of the stakeholders of the business - suppliers
- want to receive payments on time
- want regular orders
53
reasons for conflicts between different stakeholder groups
- different objectives
- misscommunication between many stakeholders
- managers want better salary
54
what is a mission statement
explains the purpose of the businesses existence, which provides direction to employees, customers and to other stakeholders
55
advantages of having a mission statement
- proves the business is ethical
- proves the business serves a purpose
-motivates staff to join and stay
- encourage directors to make the correct strategic decisions
56
disadvantages of having a mission statement
- not many people see it
- very vague
- time consuming to put together
- sometimes used as a form of promotion
57
what is the purpose of a business plan
a document that defines in detail, a companies objectives and how it will achieve that
58
describe some of the main contents of a business plan
- business objectives and aims
- revenues and costs
- profit plan
- goods / services description
- marketing plan
- strengths
- weaknesses
59
advantages of having a business plan
- more likely to get a load from the bank
- shows organisation
- gives a structure to the business for employees
- monitor performance
-attracts investors
60
disadvantages of having a business plan
- time consuming
- can be inaccurate
- not much flexibility
- very short term
61
what is the ' plan - do - review ' cycle
- it is a a continuous process that involves planning what needs to be done, doing it, and then reviewing the results to see if the objectives have been achieved.
- can help organizations to improve their performance.
62
how can the plan-do-review cycle improve the businesses performance
- offers opportunity to evaluate methods and objectives
- cosistent improvements and corrections can be made throughout production
63
what is opportunity costs
the loss of one opportunity when another option has been picked
63
what is opportunity costs
the loss of one opportunity when another option has been picked
64
what is opportunity costs
the cost of missing out on the next best alternative after choosing a different option
eg - buying a machine but not being able to open a new store
65
examples of non finacial methods of business performance
- customer reviews
- staff retention
-market share
- customer retention
- company reputation
66
examples of financial methods of business performance
- cash flow
- profits
- market share
-budgets
67
what is cash flow
the movement of net cash and cash equivalent being moved in and out of the business
68
what is profit
the revenue remaining after all costs paid
69
what is the purpose of forecasting
forecasting helps investers and business owners make informed decisions about the future
